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Tax-credit bills advance

Senate, House send 5 measures to governor by Michael R. Wickline | April 21, 2021 at 4:21 a.m.

The Arkansas Senate voted Tuesday to send the governor four tax-credit measures, while the House of Representatives sent one.

Meanwhile, the House Revenue and Taxation Committee recommended the House approve a handful of other tax-cut bills.

In 34-0 votes, the Senate approved:

• House Bill 1555 by Rep. Joe Jett, R-Success, which would allow the state Division of Heritage to issue up to $8 million in historic rehabilitation income tax credits each fiscal year, up from the current limit of $4 million, starting in fiscal 2022. The bill also would extend the sunset of the historic rehabilitation income tax credit from Dec. 31, 2027, to Dec. 31, 2037.

The bill is projected by the finance department to reduce state general revenue by $1 million in fiscal 2022, $2 million in fiscal 2023 and $3 million in fiscal year 2024 and after.

• House Bill 1596 by Jett that would allow a specialty or job printing business that produced a printed item for a customer or an item to be placed on the market for a retail sale to be considered a "manufacturer" for the manufacturing machinery and equipment sales tax exemption. The finance department projected the bill will reduce state sales tax revenue by $2.6 million in fiscal 2022 and $4 million in fiscal 2023.

• House Bill 1314 by Rep. David Hillman, R-Almyra, which would increase certain maximum credits allowed under the Water Resource Conservation and Development Incentive Act for tax years starting on or after Jan. 1, 2021.

The finance department projects the bill would reduce state tax revenue by $301,886 in fiscal 2022, $603,732 in fiscal 2023 and $905,597 in fiscal 2024 and thereafter.

• House Bill 1513 by Rep. Jon Eubanks, R-Paris, which would create an up to $3,500 income tax credit for retired law enforcement officers who work cold cases for the Arkansas State Police. The department projects that the bill would reduce state general revenue by $25,000 in fiscal 2023.

The state police director, Col. Bill Bryant, told a House committee last week that the agency has one retired officer working on cold cases, and he hopes to expand it to three. The state police has about 30 cold cases, and these retired officers will work on missing-persons cases after the cold cases, he said.

On the other side of the Capitol, the House voted 86- 2 to approve Senate Bill 543 by Sen. David Wallace, R-Leachville, which would extend an income tax credit for steel manufacturers that purchase certain waste reduction, reuse and recycling equipment.

The bill goes to the governor.

Under current law, the income tax credit is available to qualified steel specialty products manufacturing facilities that started construction on or after Jan. 1, 2017, with a closing date before July 1, 2018, the finance department said.

The bill extends the credit to such facilities that commence construction on or after Jan. 1, 2021, with a closing date before July 1, 2023, according to the finance department. The credit is equal to 30% of the cost of the qualifying waste reduction, reuse or recycling equipment.

The project must have a total investment of more than $250 million and create at least 150 new jobs with an average annual wage of $75,000. No tax credits would be issued to a taxpayer unless the project is determined to have a positive cost-benefit analysis from the Arkansas Economic Development Commission and finance department's Office of Economic Analysis and Tax Research and a performance and clawback agreement is signed by the taxpayer and commission.

Wallace said his bill aims to assist Big River Steel in Mississippi County.

Also Tuesday afternoon, the House Revenue and Taxation Committee advanced:

• Senate Bill 566 by Wallace, which would extend a sales and use tax credit to help Nucor Steel Arkansas.

Under the bill, a company that qualified for a retention tax credit through the InvestArk program by an application approved by the Arkansas Economic Development Commission during June 22-28, 2017, may incur eligible project costs within six years rather than four years of the incentive agreement between a company and the commission, the finance department said.

The InvestArk sales and use tax credits for the eligible companies may be claimed after July 1, 2023, are contingent on a positive economic analysis by the commission's director, and may be claimed up to $750,000 for each qualifying project in any fiscal year under the bill, the department said. The department projects the bill would reduce state general revenue by up to $3.4 million a year in fiscal years 2024-28.

• Senate Bill 181 by Sen. Trent Garner, R-El Dorado, which would expand the sales tax holiday to include electronic devices, effective July 1. State law provides a sales tax holiday for clothing, clothing accessories or equipment, school art supplies, school instructional materials and school supplies.

The bill is projected by the finance department to reduce state sales and use tax revenue by $1.95 million in fiscal 2022.

• Senate Bill 244 by Sen. Kim Hammer, R-Benton, which would expand the current sales tax exemption for instructional materials to include the electronic equipment required to make use of technology-based educational materials and electronic software, effective July 1, 2021.

The financed department has projected the bill would reduce state sales and use tax collections by $4.2 million in fiscal 2022 and by $4.3 million in fiscal 2023.

• Senate Bill 26 by Sen. James Sturch, R-Batesville, which would expand the reduced sales and use tax rate on utilities to include coal purchased by a manufacturer that is used directly in the manufacturing process, effective Oct. 1, 2021. The reduced sales and use tax rate is 0.625%.

The finance department projected the bill would reduce state sales and use tax revenue by $537,000 in fiscal 2022 and $826,000 in fiscal 2023.

Print Headline: Tax-credit bills advance

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